Managers Leaving JPMorgan With Company’s New Direction

While the shifting started out slowly, several sales and trading managers have left JPMorgan in recent months. Ed Tishelman, recently an underwriter and previously head of institutional trading, is likely to be the next departure. Sources confirmed last week that he is looking for a job elsewhere. At least three other managing directors have left the firm since this spring, including a trading manager and the heads of short-term products, and structured products and proprietary trading.“Ed was looking to get back to having a broader daily exposure and dialogue with investors,” said one source who calls Tishelman a friend. “That’s really where he has spent the majority of his career.”Tishelman declined to comment for the story.Before Tishelman’s departure, managing directors Thomas Gallo, Russell Mannis, and Matthew Roggenburg left JPMorgan in the spring. Last month, Peter Gabriele, who was in charge of cash and derivatives trading, took another position at JPMorgan outside the muni group.JPMorgan said the turnover is a result of a new strategic direction for its muni sales and trading platform. Bill Johnson, who became head of JPMorgan’s tax-exempt capital markets group in August 2006, is working to combine some of the efforts of its traditional bond sales and trading with its muni derivatives operations.“Over the past twelve months, we have streamlined the group, merged our derivative and cash platforms and made it easier for clients to tap our expertise,” said JPMorgan spokesman Brian Marchiony in a prepared statement. “We have created a more nimble organization that would not have been possible without such a deep and talented bench.”Johnson declined several requests for an interview.He joined JPMorgan most directly from Paloma Partners, a multi-billion dollar hedge fund that JPMorgan acquired part of in February 2006. Competitor UBS Securities LLC has also been overhauling its muni group to build a stronger derivatives and capital markets business. Shortly after David Shulman was named head of the firm’s muni group last year he began a campaign of hiring some of the market’s most well-known capital markets professionals. Former JPMorgan vice president Ross Jackman was one of Shulman’s first hires, and Roggenburg left JPMorgan in April to join UBS.But tying derivatives more closely into their daily cash muni bonds business might not be the only reason for change at JPMorgan. Sources familiar with the situation said the recent sales and trading management turnover also may stem from shifts at the top.Johnson’s hire came in the wake of a perceived leadership contest between former co-heads of the department Peter Hill and Gene Saffold. Hill led the department before JPMorgan merged its municipals unit with that of Bank One Corp. in mid-2004. Saffold managed the Bank One municipals group before the merger.Hill left the firm when Johnson was hired, and Saffold was named manager of municipal banking and credit origination activities. Hill resurfaced in February as head of public finance at bond insurer ACA Capital Holdings Inc.Further complicating the situation, JPMorgan’s former head of tax-exempt derivatives, Doug MacFaddin, was promoted last fall to lead cash and derivatives sales and marketing. Some sources blamed MacFaddin’s promotion for the recent string of departures.One source familiar with the situation described the reaction as an “over my dead body” response. The source added that the streamlining only accounts for the departures of management-level professionals, and that there have been several “line people” in the staff who have also left.But the turnover does not seem to have diminished JPMorgan’s sales and trading presence in the market, said Hans Hanf, senior vice president of business development, at Chapdelaine & Co.“As a matter of fact, they like to see as many situations from us as they did before,” Hanf said.In the primary market, JPMorgan has been the seventh-busiest senior manager of muni bond sales this year, according to Thomson Financial data accessed Friday. The firm has underwritten 242 deals worth a combined $17.5 billion.The firm ranked fourth among all managers in 2006, underwriting 331 deals totaling $25.5 billion. During the past five years, JPMorgan has finished the year ranked as high as third — in 2002 — and has low as sixth — in 2004.Hanf added that it makes sense for JPMorgan to look for ways to integrate derivatives more into the day-to-day flow of traditional bond sales and trading.“You probably don’t have to be a rocket scientist to figure out that if you can’t find a way to make a little more money for the department using derivatives, you’re not going to be one of the guys who is included in the mix in a lot of these structured deals,” he said.